April 27, 2015
Mortgage rates haven't been moving much lately, and today was no exception. Some lenders were a hair better than Friday while others were just a bit worse. On average, the most prevalently quoted conventional 30yr fixed rates remained unchanged for top tier borrowers. Most lenders are at 3.75% in that regard while a few are at 3.625%. Keep in mind that it may make sense to pay more up front in exchange for a lower rate, depending on personal preference.
Little happened in terms of the financial markets that underlie interest rates today. There were no significant economic reports and news headlines were generally of no interest to traders. This will change in a big way on Wednesday as we'll not only get the first reading on Q1 GDP, but also the Fed Announcement in the afternoon. Even though markets aren't expecting any substantive changes from the Fed, they'll still be looking for clues as to substantive changes coming up in future meetings.
Rates have been reluctant to move too far in either direction before those events, so naturally, more volatility is possible from there on out. Whether it's ultimately good or bad for rates is impossible to know ahead of time. The bigger risk continues to be that we're in the middle of a long term bottoming-out in this 3.625-3.75% range.
Loan Originator Perspective
"With the Fed and GDP on deck and due to be released on Wednesday, i suspect the markets will trend sideways until then. So you will not have much to gain or lose by locking or floating until after Wednesday. So today is the say to lock if you want to lock before the data hits on Wednesday. As of 2pm eastern, MBS are at the highs of the day, so if locking today wait until as late as possible to see if your lender passes along any gains. Current prices do not really justify improving now, but if we gain a little more from here, a reprice for the better might be warranted. " -Victor Burek, Open Mortgage
"We're coasting along towards Wednesday's day of reckoning. We'll get the Fed Statement and first quarter GDP numbers, both of which can greatly influence rates. Strengthening economic conditions/Fed rhetoric translates to higher rates; a gloomy outlook could lower rates. Floating into these events can be high stakes gambling. If you are floating, I'd suggest discussing the pro's/con's for your particular scenario with your lender tomorrow. No one wants to lose their loan because they didn't lock and rates subsequently went up!" - Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.75%
- FHA/VA - 3.375-3.5
- 15 YEAR FIXED - 3.00-3.125
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2015 began with a strong move to the lowest rates seen since May 2013. The catalyst was Europe and the introduction of European quantitative easing.
- With European QE having now begun, we're on high alert for a big picture bounce in European economic data, sentiment, growth, and rates. The more it looks like such a bounce is taking hold, the greater the risk that domestic bond markets and mortgage rates will also experience a big bounce higher. There was a possibility that the bounce occurred in February, but European bonds got back to the task of improving in March. This helped calm the domestic bond market's move toward higher rates. April's weak employment report helped solidify it.
- It's a highly uncertain time for global financial markets. On the one hand, some believe we're in the midst of a race among world central banks to devalue currencies and lower interest rates. Others believe that the global economy is turning a corner and rates will grind higher. That had been creating a lot of volatility, which made for uncertain fluctuations from day to day. But those periods of volatility have been interspersed by utter indecision where rates are effectively drifting sideways with no conviction and no desire to get off the fence. We have yet to see a truly big/scary move higher after 2015's first (and so far "only") big push toward higher rates that ended at the beginning of March. We've been sideways right in between the highs and lows ever since.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).